New York OTB Report: Racing Being Threatened

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With the viability of the racing and breeding industries in New York “in question,” a state task force is recommending a series of changes in the law to address new competition for dwindling betting dollars and repair a situation that has created a damaging, internecine war among racing interests in the state.

But the Task Force on the Future of Off-Track Betting shied away from recommending steps as dramatic as out-right mergers of the state’s OTB corporations or mergers with racetracks to end decades of what critics say has been damaging competition.

The report did recommend privatization of OTB branches if its 11 key recommendations are ignored by lawmakers, but left the door wide open to local governments continuing to have a role in running the overall operations. The OTB corporations have been criticized over the years as being major political patronage mills.

“Should no action be taken to properly align all these interests, then horse racing in New York will end,” the report said.

The task force of state government appointees recommended steps such as a centralized tote system and account wagering services, as well a central television channel to promote all New York racing and wagering.

“The time for streamlining OTB in New York is long past overdue,” task force chairman John Van Lindt said in a written statement. “Having a vibrant and efficient network of OTB operations is critical to the future of New York’s Thoroughbred and Standardbred racing—as well as to the taxpayers.”

The proposals include:

Forcing out-of-state advance deposit wagering operators who take bets from New Yorkers to be licensed by the state regulators and to pay the same payments and breeders’ fees as those returned on bets originating in the state;

Consolidation of marketing and business functions at the OTB corporations;

New legislatively-imposed rates on what racetracks charge for exporting their signals to better compete with out-of-state ADW rebate programs;

New “hold harmless” provisions to ensure OTB payments do not fall below a certain level to local governments, which were among the original intended beneficiaries of the OTB law;

A single, mandatory payment that tracks must make to OTB corporations, instead of the current hodge-podge system that leaves some payments to state law and others to negotiations, and allow unrestricted in-home simulcasts for tracks and OTB networks, including Internet video streaming;

Eliminate so-called “dark-day payments” and “maintenance of effort” payments to tracks that have had video lottery terminals operating for at least two years and require OTB corporations to give preference to New York races in their branches;

And promoting joint marketing efforts.

“We have identified many ways to make OTBs more efficient and help them be better producers of revenue, with one great example being the lifting of certain restrictions that put both the OTB corporations and the tracks in better position to compete with out of state ADWs,” John Crotty, a task force member, said in a statement in releasing the 197-page report.

The panel said laws that built in “protectionist payments” for harness tracks need to end, especially given the precarious financial state of the state’s OTB systems.

The task force rejected the loudest demand from New York City Off Track Betting Corp. that statutory payments to tracks and governments be paid after the OTB corporations pay all operating expenses first.

“If this idea were to be adopted, there would be little incentive for the OTBs to reduce overhead,” task force member Thomas Casaregola said.

NYCOTB officials earlier in the day said that change is a make-or-break demand that must be met if it is to obtain the financing it needs on the private market to keep the operation afloat after March 30.

The full report can be found at http://www.otbfuture.com.